Posted Mon, 2010-02-01 18:21 by Anonymous
Melissa Thomasson, Miami University
This article describes the development of the U.S. health insurance system and its growth in the twentieth century. It examines the roles of important factors including medical technology, hospitals and physicians, and government policy culminating in the development of Medicare and Medicaid.
1900-1920: Sickness Insurance versus Health Insurance
Prior to 1920, the state of medical technology generally meant that very little could be done for many patients, and that most patients were treated in their homes. Table 1 provides a list of pioneering early advances in medicine. Hospitals did not assume their modern form …show more content…
Insurance Companies Initially Unwilling to Offer Health Insurance Policies
The low demand for health insurance at the time was matched by the unwillingness of commercial insurance companies to offer private health insurance policies. Commercial insurance companies did not believe that health was an insurable commodity because of the high potential for adverse selection and moral hazard. They felt that they lacked the information to accurately calculate risks and write premiums accordingly. For example, people in poor health may claim they to be healthy and then sign up for health insurance. A problem with moral hazard may arise if people change their behavior -- perhaps engaging in more risky activities -- after they purchase health insurance. According to The Insurance Monitor, "the opportunities for fraud [in health insurance] upset all statistical calculations.... Health and sickness are vague